CPP and OAS are Canada’s two main public retirement income programs. CPP is a contributory pension funded by payroll deductions and earned through working years. OAS is a residency-based pension funded from general tax revenue. Both can be deferred for higher monthly amounts, both pay lifelong indexed benefits, and most Canadians receive both. The key differences: CPP amount depends on contribution history; OAS depends on years of Canadian residency after age 18.
Side-by-side comparison
| Feature | CPP | OAS |
|---|---|---|
| Eligibility basis | CPP contribution history | Years of Canadian residency after age 18 |
| Funded by | Employee + employer + self-employed contributions | General tax revenue |
| Earliest start age | 60 (with permanent reduction) | 65 |
| Standard start age | 65 | 65 |
| Latest start age | 70 (with permanent bonus) | 70 (with permanent bonus) |
| 2026 maximum monthly at 65 | $1,507.65 | $743.05 (Q2 2026) |
| Average monthly amount | ~$900 (varies widely) | ~$700 (most receive close to maximum) |
| Indexation | Annual (January) | Quarterly (Jan, Apr, Jul, Oct) |
| Income-tested | No | Yes (clawback above $95,323 in 2026) |
| Available outside Canada | Yes (full amount) | Yes if 20+ years of residency at age 65 |
How each is calculated
CPP: The amount depends on the contributor’s pensionable earnings each year and the YMPE for that year. Maximum CPP at 65 is paid only to people who contributed at or above the YMPE for 39+ working years. Most Canadians have years with no contributions or earnings below the YMPE, producing CPP closer to the average $900/month.
OAS: Full OAS requires 40 years of Canadian residency after age 18. Partial OAS is available with 10 years of residency (calculated as years/40 × full amount). Years of residency are calendar years, not partial; e.g., a Canadian with 25 years of residency receives 25/40 = 62.5% of the full amount.
Worked example: typical retiree
A Canadian-born retiree, lifelong resident, with a working career averaging $60,000/year (below YMPE most years). At age 65 in 2026:
- OAS: Full amount = $743.05/month (full 40 years of residency)
- CPP: Approximately $900/month (working career below YMPE most years)
- Total monthly federal pension income: $1,643.05
- Annual: $19,716
For a high-income lifelong resident contributing at YMPE for 40 years:
- OAS: $743.05/month (capped at full amount)
- CPP: $1,507.65/month (full maximum)
- Total: $2,250.70/month or $27,008/year
Timing decisions
Both can be deferred up to age 70:
- CPP deferral: 0.7% per month past 65 (8.4%/year, max 42% at 70). Breakeven vs starting at 65 is approximately age 81.
- OAS deferral: 0.6% per month past 65 (7.2%/year, max 36% at 70). Breakeven vs starting at 65 is approximately age 84.
OAS cannot start before age 65. CPP can start as early as 60 with a permanent reduction (0.6% per month before 65, up to 36% at age 60).
The 75-plus OAS bonus
OAS recipients automatically receive a 10% increase to their OAS at age 75. CPP has no equivalent. The 75-plus bonus is on top of any deferral bonus, so a retiree who deferred OAS to 70 gets both the deferral bonus and the 75-plus bonus.
Income testing: the OAS clawback
OAS is reduced by 15% of net world income above the annual threshold ($95,323 for 2026 income year). High-income retirees can have OAS fully clawed back ($154,753 for ages 65-74, $160,696 for 75+). CPP is never clawed back regardless of other income.
This makes OAS strategically more valuable for moderate-income retirees and CPP relatively more valuable for high-income retirees who would lose OAS to clawback anyway.
Cross-border treatment
CPP is fully payable to non-residents anywhere in the world after qualifying. OAS is payable outside Canada only if the recipient lived in Canada for at least 20 years after age 18. Less than 20 years of residency means OAS stops six months after departure.
CPP is generally subject to Canadian income tax for non-residents, with rates varying by tax treaty. Many treaties (including the Canada-US treaty) exempt or reduce withholding on periodic payments.
How to apply
OAS: Mostly automatic at age 65 for Canadians with sufficient residency. Service Canada sends notification several months before age 65. Deferral requires Form ISP-3550.
CPP: Not automatic; must be applied for. File through My Service Canada Account or Form ISP-1000, six months before desired start date.
Frequently asked questions
- What is the difference between CPP and OAS?
- CPP is a contributory pension based on your working-year contributions. OAS is a residency-based pension funded from general tax revenue. CPP can start at 60; OAS cannot start before 65.
- Can I get both CPP and OAS?
- Yes. Most Canadians receive both. They are separate programs with separate eligibility rules and amounts.
- Is OAS income-tested but CPP not?
- Correct. OAS is reduced by 15% of net world income above $95,323 (2026). CPP is never clawed back regardless of other income.
- Which has the higher maximum?
- CPP at age 65 has a higher maximum ($1,507.65/month in 2026) than OAS ($743.05/month at age 65-74). Most Canadians get less than max CPP because they did not contribute at YMPE every year.
- Can I defer both CPP and OAS?
- Yes. CPP defers at 0.7% per month past 65 (max 42% at 70). OAS defers at 0.6% per month past 65 (max 36% at 70). OAS also has an automatic 10% bonus at age 75.
- Can I receive CPP and OAS outside Canada?
- CPP is fully payable to non-residents anywhere. OAS is payable outside Canada only if you had 20+ years of residency after age 18. Less than that and OAS stops six months after departure.
- Which to apply for first if approaching 65?
- OAS is mostly automatic at 65 (Service Canada notifies you). CPP is not automatic; apply through Service Canada at least six months before your desired start date.